Suzlon Energy Limited CORPORATE PRESENTATION OCTOBER 2016 - - PowerPoint PPT Presentation

Suzlon Energy Limited

CORPORATE PRESENTATION OCTOBER 2016

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Disclaimer

• This presentation and the accompanying slides (the “Presentation”), which have been prepared by Suzlon Energy Limited (the “Company”), have been

prepared solely for information purposes and DOES not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis of or be relied on in connection with any contract or binding commitment whatsoever. The Presentation is not intended to form the basis of any investment decision by a prospective investor. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company.

• This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes

no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, reliability or fairness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of or any omission from, this Presentation is expressly excluded. In particular, but without prejudice to the generality of the foregoing, no representation or warranty whatsoever is given in relation to the reasonableness or achievability of the projections contained in the Presentation or in relation to the bases and assumptions underlying such projections and you must satisfy yourself in relation to the reasonableness, achievability and accuracy thereof.

• Certain matters discussed in this Presentation may contain statements regarding the Company’s market opportunity and business prospects that are

individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various international markets, the performance of the wind power industry in India and world-wide, the Company’s ability to successfully implement its strategy, the Company’s future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, the Company’s market preferences and its exposure to market risks, as well as other risks. The Company’s actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this Presentation. The Company assumes no obligation to update any forward-looking information contained in this

• Presentation. Any forward-looking statements and projections made by third parties included in this Presentation are not adopted by the Company and

the Company is not responsible for such third party statements and projections.

• No responsibility or liability is accepted for any loss or damage howsoever arising that you may suffer as a result of this Presentation and any and all

responsibility and liability is expressly disclaimed by the Management, the Shareholders and the Company or any of them or any of their respective directors, officers, affiliates, employees, advisers or agents.

• No offering of the Company’s securities will be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Accordingly, unless

an exemption from registration under the Securities Act is available, the Company’s securities may not be offered, sold, resold, delivered or distributed, directly or indirectly, into the United States or to, or for the account or benefit of, any U.S. Person (as defined in regulation S under the Securities Act).

• The distribution of this document in certain jurisdictions may be restricted by law and persons into whose possession this presentation comes should

inform themselves about and observe any such restrictions

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Agenda

Wind Business Introduction Solar Business SE Forge Finance Vision 2022

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Suzlon Overview

We are just a 20 year old company

• >15 GW cumulative worldwide installations
• ~4,200 MW manufacturing capacity (Wind)
• >7,500 Workforce
• In house Global R&D centers in USA, Germany, Netherlands, Denmark, India
• Largest renewable company in India
• Recent foray in Solar Space

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~15.5 GW of Cumulative Worldwide Wind Installations till date

1 2 3 4 5 6

5 1 6 3 2

North America 2779 MW South America 806 MW South Africa 139 MW Europe 508 MW

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Australia 764 MW Asia 10477 MW

Presence in 19 countries across 6 continents

Note: Does not include Senvion Installations

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Business Overview

Wind

Suzlon Group

Solar End-to-End Expertise Strong Customer Relationships Supply Chain EPC Life Cycle Asset Management (Service) Land, Approvals, Infrastructure & PE Complete renewable solution provider Manufacturing + Supply Turnkey Solution Provider Turnkey Solution Provider Forging & Foundry

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Tulsi Tanti, CMD

• Group Strategy and Vision
• Product Strategy and Marketing
• Stakeholder Relationship

J.P. Chalasani, Group CEO

• Group Business Management
• India Business (Wind and Solar)
• Corporate Communication
• Human Resource

Kirti Vagadia, Group CFO

• Group Finance
• Investor Relations
• Group Legal
• Management Audit

Executive Board

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Vinod R. Tanti, Whole Time Director & COO

• Supply Chain Management
• Project Execution
• Global QHSE

Rakesh Sarin, CEO - International Business and Global Service

• International Business
• Global Services
• SE Forge

Duncan Koerbel, CTO

• Innovation
• New Product Development
• Global R&D and Engineering

Executive Board

More than 100 man years of experience at the helm

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Our Vision, Mission and Values - 2022

Vision

To be the Best Renewable Energy Company in the world Work towards Social, Economic and Sustainable development to create better life for future generations

Mission

Deliver utility scale, best in class, end to end integrated renewable energy solutions to our customers Focus on High Volume & Profitable markets Focus on Wind-Solar Hybrid utility scale solutions Deliver Best in Class Value Added Service Globally Continuously reduce Levelized Cost of Energy (LCOE) Regional Manufacturing with global sourcing End to End Integrated Renewable Energy Solutions provider Asset Light, Debt Light Business Model Create customer centric and performance oriented organization

Values

Integrity | Agility | Creativity | Adding Value | Commitment

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Agenda

Wind Business Technology, Manufacturing & Service Introduction Solar Business SE Forge Finance Vision 2022

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Globally Proven In-House R&D Capabilities

Hamburg Rostock Hengelo Pune Aarhus Vejle

Suzlon Technology Locations: Germany Hamburg

• Development & Integration
• Certification

Rostock

• Development & Integration
• Design & Product Engineering
• Innovation & Strategic Research

The Netherlands Hengelo

• Blade Design and Integration

India Pune

• Design & Product Engineering
• Turbine Testing & Measurement
• Technical Field Support
• Blade Engineering

Vadodara

• Blade Testing Center

Hyderabad

• Design & Product Engineering (BOP team)

Chennai

• Design & Product Engineering (Gear Box Team)

Denmark Aarhus Vejle

• SCADA
• Blade Science Center

Best match between skills & location – Efficient leverage of R&D spending

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2.1 MW Series: Proven Platform with 100,000,000 Operating Hours

Higher energy yield Lower cost of energy Higher returns

>800 MW sold ~330 MW Installed >1.8 GW Installed till date

S111-120 S9X-90 S97-120 S111-90

>300 MW sold ~30 MW installed Prototype Certified in June

~65% Increase in Energy Yield

>5.7 GW Installed till date

S88-80 2008 2011 Current 3,500 turbines across 15 countries

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Hybrid Towers – Innovation at Work

Hybrid Tower - Combination of lattice and tubular

• Higher hub height (120 M) at optimized cost

‒ Reduced LOCE due to higher AEP ‒ Reduced steel requirement ‒ Lower foundation cost ‒ Logistic friendly – access to sites that were earlier logistically challenging

• Available in S97 and S111 product suite
• S97 – 120 Prototype achieved 35% PLF

‒ Installed in Jan’14; At Nani Ber District of Kutch, Gujarat ‒ Generated 64.28 lacs units (kWh) over 12 months

• S111-120: Prototype Certified

‒ Targets over 40% PLF Optimizing cost and generation for low wind sites

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Global Coverage - Next Generation Products

Product S128 – 2.6 MW S128 – 3.0 MW MW Rating 2,600 kW 3,000 kW Rotor Diameter 128 meters 128 meters Tower Height 120 m - 140 m 120 m - 140 m Wind Class IEC III (Low Wind) IEC II (Medium Wind) Focus Markets Domestic International Time to Market 2018 2018 S128 S97 S111 10% LCOE Reduction Over S97 Over S111 ~20% reduction in Wind Levelized Cost Of Electricity (LCOE) 10% LCOE Reduction Committed to lower LCOE

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Manufacturing Capacity India based ~3,600 MW China JV* ~600 MW Total ~4,200 MW

*Holds 25% stake in China JV Calculated based on Nacelle assembly capacity

Installed Capacity (MW) - spread across 20 manufacturing & testing locations in India

Vertically Integrated Low Cost Supply Chain

Competitive edge for both domestic and overseas market

Foundry Forging Mould Generator Control Panel Transformer Nacelle and Hub Tubular Tower Rotor Blade Blade Testing

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Pan India Manufacturing Footprint

Blade Tower Nacelle Andhra Pradesh Gujarat (Daman) Karnataka Madhya Pradesh Maharashtra Rajasthan Tamil Nadu (Puducherry)

• Blade Logistics is most costly, complex and time consuming
• Only player to have blade capacity in every wind state
• To translate into huge savings in logistics costs

Optimized logistics cost

             

* * *

*Contract Manufacturing

Reduced Logistic Time Lower Cost Lower Working Capital Days

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Best In Class Service Capabilities

Custodian of

US$ 13.5 bn

asset base worldwide

~15 GW

Under Service fold

~100%

Renewal Track Record

19.8%

5 year Revenue CAGR (FY16 US$ 225 M) 18% Revenue Share in FY16

• Large Operating Fleet under Service

– 20 years of operating history – ~15.5 GW of installations – 100% of turbine sold in India is under our service – 90+% turbine sold outside is under our service

• Availability consistently above industry standards
• Near 100% renewal track record
• Provide solutions to improve turbine output
• 24X7 SCADA Monitoring and online tracking systems

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Agenda

Wind Business Markets Introduction Solar Business SE Forge Finance Vision 2022

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Renewables Target 2022 Estimated India Power Demand

India: Strong Growth Fundamentals for Renewables

1108 2015 2030 >4000 +9%

Source: Ministry of Power Source: MNRE (Billion Units)

Renewables preferred for affordability, sustainability and security 60 60 40 43 Mar-16 175 2022 +132 GW

(GW)

Solar Utility Scale Wind Utility Scale Solar Rooftop Cumulative Wind Market

(GW)

60 27 FY 16 FY 22 Annual Average > 5.5 GW

Source: MNRE

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India Commissioning Volumes

2,018 1,306 1,674 1,870 2,515 1,161 415 403 442 900 4,300 +48% +26%

• 19%

FY17E* FY16 3,415 FY15 2,312 FY14 2,077 FY13 1,721 FY12 3,179 Suzlon Others

*FY17 E – Source: Internal Estimates

(MW)

FY16 Saw Highest Annual Wind Capacity Addition in Two Decades

On a strong growth trajectory…

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Increasing Comfort of Global Institutional Customers in India Wind

India Renewable Focussed IPP (PE Backed / Listed) Part of Diversified Corporate Group Domestic Diversified Utility Foreign Diversified Utility HERO Group 319 ILFS 1004 OGPL 420 Greenko 612 Mytrah 750 Orange Power 356 Continuum 411 OSTRO Energy 237 Renew 880 Reliance 55 Torrent Power 50 Tata Power 620 ENEL 150 Sembcorp 726 CLP 981 Installed Capacity in India (Fig in MW) >75% of 10 GW added since FY12

Source: Internal Estimates; as on 31st March 2016

Others 15% PSU 10% IPP / Utilities 75%

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Key Government Initiatives: Demand Drivers

Potential for huge capacity unlocking for the industry Strengthening Demand Environment ‒ Introducing Renewable Generation Obligation (RGO) ‒ Enforcing Renewable Purchase Obligation (RPO) ‒ Creation of demand from non renewable rich states ‒ Waiver of Inter State transmission charges & losses ‒ UDAY scheme to improve DISCOM financial health Strengthening Grid and transmission systems ‒ Green Corridor ‒ Scheduling and Forecasting ‒ Inter State Transmission Future Growth Drivers (Policy Under Draft) ‒ Wind Solar Hybrid Farms ‒ Repowering ‒ Offshore ‒ National Renewable Energy, Act

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Suzlon Strengths in India

Full Turnkey Solution Provider Strong Customer Relationship Best In Class Service Capabilities Pan India Presence Technology Leadership 20+ Years Track Record

REGAIN 50%+ MARKET SHARE

End-to-end service provider with strong presence across value chain & customer segments

TARGET

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International Business Strength & Strategy

• Equipment Supply and Supervision
• Cost effective manufacturing from India
• Lean Management; Minimal Fixed Cost
• Market with established service base
• Optimize logistics cost through make vs buy

Low Cost Supply Chain and Manufacturing Established Customer Relationships Globally Proven Technology Prepared to tap 332 GW global opportunity, incremental to India business volumes

Map not to scale. All data, information, and map are provided "as is" without warranty or any representation of accuracy, timeliness or completeness.

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International Market Roadmap

36 13 16 16 15 16 16 17 17 19 39 37 33 30 13 APAC EMEA 70 2019E 74 2020E 332 GW America 2018E 69 2017E 61 2016E 58

Global Wind Industry Outlook (GW)

Source: BENF Q2 2016 Wind Market Outlook

Prioritizing markets based on opportunity, sustainability and ease of access

FY18

Europe North America

FY19

Latin America APAC

FY20

EMEA

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US market Offers Substantial Opportunity

Source: MAKE

US Market Outlook (Annual Installations in GW) PTC Qualification Construction Starting in: PTC (%) 2016 100% 2017 80% 2018 60% 2019 40% 10.5 10.1 9.3 7.5 8.4 8.6 2018E 2015 2016E 2017E 2019E 2020E Suzlon Strengths in USA  ~15 Years of Strong Presence  ~2.7 GW of Cumulative Installations  Proven Technology  Strong customer relationships  Proven execution and service track record  Strong Brand Name  Low cost manufacturing base

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Solid Presence in USA – Customer & Geographic

OR MT ID WY CA NV UT CO AZ NM TX OK KS NE SD WA ND MN IA MO AR WI IL MI IN OH PA NY KY WV TN SC MS AL GA ME DE NJ VT NH MA RI MD CT LA VA NC FL Nova Scotia

Customer Name MW Exelon 599 Iberdrola 517 NRG 416 EDPR 399 Everpower 239 Atlantic Power 120 Capstone Infrastructure 32 Olympus 21 Others 44 Total under Service contract 2,386 2.7 GW Installed – 1,024 WTGs Under Service Contract

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Agenda

Wind Business Introduction Solar Business SE Forge Finance Vision 2022

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Solar Foray: Turnkey Solution Provider

Leveraging Common Strengths in Wind for Solar

 Site Development Process  EPC – Wind more complex than Solar  O&M – Wind more complex than solar  System Integration Minimal Capital Investment Low Fixed Cost Turnkey + O&M Margin  Zero Manufacturing  Outsourcing Model  Low Working Capital intensive  High Volume potential  Lean management team  Leveraging the existing EPC & O&M team

Business Strategy Business Model: Turnkey Solution Provider

 To establish initial track record  To be divested in full Technical Strength

Relationship Strength

 Regulatory Approvals  Customers  Project Financing assistance to customers Own Direct Bidding + Divestment Third Party Order  Focus going forward

From “Wind Player” to “Renewable Player”

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Solar Bidding Status Update 515 MW

Bids Won

• Rs. 5.36

Per unit average tariff

340 MW

PPA Signed Suzlon SE Solar Ltd. (100 MW Veltoor Project) 80% Debt 20% Equity Suzlon (51%) CLP (49%)

• Full Turnkey Solution
• 25 Years O&M
• Turnkey Price
• O&M Service Charges

Arms Length

(Acquired for Rs. 73.5 crs from Suzlon)

CLP to acquire balance 51% from Suzlon 1 year Post COD

100 MW CLP Deal Synopsis

Minimizing capital risk under bidding route

100 MW

Divestment achieved Note: Investors identified for another 110 MW projects

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Wind Solar Hybrid is the Future

Improve Grid Utilization

Hourly Spread of a Day Watts

Better Grid Management

• Improved Grid Utilization
• Smoothing of intermittency
• Better accuracy in Combined forecasting / scheduling

Limited Investments

• Reduced per MW land requirement
• 20% Capex reduction in pooling substations and

EHV lines 1 MW Wind-Solar Hybrid Offers better utilization and stability to grid

Complimentary Generation profile Key benefits of Hybrid Power (Wind and Solar)

60% Integrated Hybrid 40% Solar 20%

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Agenda

Wind Business Introduction Solar Business SE Forge Finance Vision 2022

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Forging & Foundry Business 42,000 Rings

P.A. forging capacity

1,20,000

MTPA Melting Capacity

55,000 MTPA

Machined Casting Capacity Wind Energy Bearings Oil & Gas Power Defence Transportation Others Well diversified clientele

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Volume Growth Drivers

• Growing Wind Sector
• Growing share of Non Wind Sectors
• Imposition of Anti Dumping duty

Operating leverage

• Low EBITDA break-even at 20% capacity level

Growth without major Capex requirement

• Current Utilization at ~40%

Efficiency

• Unique axial profiling technology
• Improved process flow

Growth Profile

60% Suzlon 40% External 25% India 75% Overseas 6% Wind 94% Non Wind Customer Sector Geography Strong value creation potential

Revenue Diversification Future Performance

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Agenda

Wind Business Introduction Solar Business SE Forge Financial Snapshot Vision 2022

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2 Decades of Strong Operating History

FY16 1,131 98% FY15 454 FY14 723 FY13 251 FY12 1,583 86% 1,522 77% FY10 1,460 47% 53% FY09 2,790 27% 73% FY08 2,311 42% 58% +149% FY11

(MW)

× High Debt Balance × Liability Management × Liquidity Constraints

Weak India Market Weak Global Market Weak Global Market Strong India Market Strong Global Market Strong India Market

Note: Information pertains to Suzlon ex-Senvion; India Overseas

Operational Turnaround

Demonstrated sizeable volume in the past; only last couple of years impacted

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• Fig. in MW

FY16: A turnaround year

Deliveries 359 95 454 FY15 21 2.5x FY16 1,110 1,131 900 442 2.0x FY16 FY15 Commissioning (India) Domestic Overseas EBITDA (US$ Mn) 196

• 25

FY16 FY15 15.7%

*Exchange Rate $1 = Rs. 66

Increased Volume and Strong Profitability

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“An All-Round Performance” – Across Financial Metrics

1,131 MW

Volume

149% y-o-y

$ 1,251 M Revenues

69% y-o-y

$ 32 M Cash Profit(3)

+$330M y-o-y

$ 1,025 M

Net Debt Reduction

31st March (y-o-y)

$ 166 M Net Interest

(41%) y-o-y

$ 196 M EBITDA(2)

Margin 15.7%

Note: (1) All Information pertains to Suzlon Wind; Net Debt reduction and Net Interest pertains to Suzlon Wind + SE Forge (2) Normalised EBITDA is calculated adjusting for FX loss and Liquidated Damages (3) Cash Profit is calculated as net profit adjusted for Exceptional Items, FX Loss and Depreciation (4) Numbers are as per IGAAP *Exchange Rate $1 = Rs. 66

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Consolidated Gross Debt

Substantial debt reduction achieved in past year

1,079 1,124 2,826 375 248 Reduction Mar 15 Term Debt Working Capital Jul’19 FCCBs Jun 16 1,747

Note: Consolidated Gross Debt represents Suzlon Wind and SE Forge; Numbers as per IGAAP

($ Mn)

Next 5 Year’s Maturity Profile ($ Mn) 39 62 91 10 11 11 11 FY21 98 7 FY20 73 FY19 50 FY18 21 FY17 10 3 7

(As on 30st Jun 2016)

Rupee Denominated $ Denominated (Fig. $mn) **SBLC Backed Debt of $647M assumed to be refinanced till FY23 (already in progress) ***Exchange Rate $1 = Rs. 66 No significant repayments in next 5 years Investment Grade Rating Reinstated Rationale for Investment Grade

• Reduced debt
• Improved liquidity position
• Turnaround in operations
• Robust industry outlook

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July 2019 FCCB Series Overview

FCCB Principal Value 248 547 299 Current Conversions till date July’14 Conversion Details

Price (Per Share)

• Rs. 15.46

Exchange Rate

• Rs. 60.225

Current and Diluted No. of Shares (Crs.)

Current Outstanding 502 Pending Conversion 97 Post Full Conversion 599

(US$ Mn)

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Disciplined Working Capital Levels

Consolidated Net Working Capital Days

Note: Working capital days calculated on trailing 12 months revenue

61 51 78 Dec’16 Mar’16 Jun’16

• Inventory built-up in Q1 to cater to growth

volumes in FY17

• Offset by focussed receivables management

Disciplined Working Capital Levels

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Strong Visibility for FY17

Order Book

(Fig. in MW)

Backlog for Service, SE Forge and Solar is over and above 166 265 1470 1205 1243 204 Q1 Net Intake Q1 Sales Volume FY16 End Current Backlog Post Q1 Announced Order Wins Q1 FY17 End Strong pipeline discussions

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Agenda

Wind Business Introduction Solar Business SE Forge Finance Vision 2022

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Renewable Installations LCOE Reduction Working Capital Net Term Debt

20 - 22 GW 20 - 22 % 10 % ZERO

Vision 2022

• India Market CAGR: 14%+
• Wind to remain competitive Vs Solar
• Suzlon to exceed market growth

Best Renewable Energy Company In the World

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Suzlon Campus - One Earth, Pune

Suzlon One Earth is LEED Platinum and GRIHA certified campus This campus has received the prestigious Asia Pacific Property Award in 2011

THANK YOU